THE DROP IN GOLD AND OIL WAS BIG...
BUT NOT BASED ON ANYTHING OTHER THAN THE GLOBAL ECONOMY IS SLOWING MARKEDLY ... AND THUS DEMAND PERHAPS WEAKENING.
YET STOCKS AND THE DOLLAR HAVE SOARED ON THIS DISMAL SCENARIO...
WHY IS THAT...?
IT'S A MYSTERY THAT IS NOT SUPPORTED BY ANY MACROECONOMIC THEORY... STAGNANT EARNINGS ARE NOT A BOON FOR STOCK PRICES AS A RULE.
SO MY HUNCH IS THAT IT'S A MARKET PHENOMENON...
REMEMBER OIL AND GOLD BECAME NO-BRAINERS LAST SPRING...THE THE RISE WAS NEARLY STRAIGHT UP...
THEN THE HEDGIES CHIMED IN AND DID WHAT THEY DO BEST..."HEDGED"...WHICH IN THE NEW PARLANCE OF WALL STREET MEANS.... LEVERAGED UP TO THE HILT!!
THIS IS A GUARANTEE OF A SHORT SQUEEZE...AND THAT IS EXACTLY WHAT WE GOT...
THE PLUNGE AND OIL AND GOLD SIMPLY CAN NOT BE EXPLAINED BY ANY MACRO ECONOMIC THEORY...KNOWN TO THE DISMAL SCIENCE...
HENCE, I THINK RECENT ACTION CAN BE ATTRIBUTED TO SPECULATIVE UNWINDING OF LEVERAGED POSITIONS...AND NOTHING MORE...
WHEN THE HEDGIES ARE OUT...NORMALCY WILL RETURN BUT NOT BEFORE...
GOOD OPPORTUNITY FOR THE LONG TERM INVESTOR TO TAKE A NICE MACRO BET AND LET IT RUN FOR A FEW YEARS UNTOUCHED...!!
FOR GOLD AND OIL TO MOVE BELOW THEIR CURRENT "FLOORS" OF $800 AND $100 RESPECTIVELY SOMETHING "MACRO" IS GOING TO HAVE TO COME INTO PLAY...
THE DOLLAR IS JUST TO FUNDAMENTALLY AND STRUCTURALLY WEAK TO BE STRONG FOR NO REAL REASON....
